Cash-Flow Reporting Practices for Sale and Leaseback Transactions

Show full item record

Please use this identifier to cite or link to this item:

Title: Cash-Flow Reporting Practices for Sale and Leaseback Transactions
Author: Mulford, Charles W. ; Ely, Michael L. ; Patel, Amit ; Martins, Mario
Abstract: In a sale and leaseback transaction an asset is sold and simultaneously leased back. As a result, the seller/lessee relinquishes ownership but not possession of the asset in question, which can be most any long-lived asset, including real estate or equipment. Some firms have even sold and leased back rights to motion picture films. While there is general agreement on the reporting treatment for sales entailing leasebacks that are capital leases, reporting practices differ for sales proceeds when the underlying leasebacks are accounted for as operating leases. Some companies include sale proceeds in the investing section of the statement of cash flows, while others report them as financing cash flow. As a result, calculations of free cash flow that use net capital expenditures, or gross capital expenditures net of the proceeds from asset dispositions, may not be comparable across firms. In this study, we examine and highlight cashflow reporting practices for proceeds from sale and leasebacks for a broad cross-section of firms from various industries.
Type: Technical Report
Date: 2004-11
Contributor: Georgia Institute of Technology. College of Management
Georgia Institute of Technology. Financial Analysis Lab
Publisher: Georgia Institute of Technology

All materials in SMARTech are protected under U.S. Copyright Law and all rights are reserved, unless otherwise specifically indicated on or in the materials.

Files in this item

Files Size Format View
ga_tech_cf_reporting_2004.pdf 211.3Kb PDF View/ Open

This item appears in the following Collection(s)

Show full item record